Regulators seek limit on bank payday loans

Federal bank regulators moved Thursday to clamp down on the deposit advances banks offer, a first step in what's expected to be a broader crackdown on the country's multibillion-dollar payday loan industry.

Although most people associate high-interest, fast-cash payday loans with check-cashing shops on the street or online, a handful of commercial banks, notably Wells Fargo & Co. and U.S. Bancorp, offer similar advances on paychecks or Social Security checks, for instance.

The loans are pitched to people with existing accounts as a handy help for financial emergencies and a way to avoid overdrafts.

Consumer advocates have protested that the bank products are no different from the payday loans on the street, which they view as predatory products that catch vulnerable consumers in a churn of repeat borrowing that's tough to break.

On Thursday, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. issued a 21-page guidance document seeking to rein in the products and establish a clear ability-to-repay standard.

Although relatively few commercial banks offer the products, many have been eyeing them as they seek new revenue sources.